Timeline: The Tangled 10-Year Odyssey of the Air Force's New Tanker

What was once a simple deal for the Air Force to lease 100 planes from Boeing became a decade-long tale of lobbying, intrigue and corruption charges. Here's how.

It was a multibillion-dollar competition marred by corruption, greed and political intrigue. Who would have thought that aerial refueling tankers—essentially flying gas stations—could create so much drama?

Certainly not the Air Force, which in September 2001 saw an opportunity to push through a fast-track lease-to-own deal for 100 tankers based on Boeing's 767 aircraft. The Air force figured that an aircraft lease, like leasing a car, would allow it to buy something that it couldn't immediately afford: a fleet of new aircraft to replace its Eisenhower-era KC-135 tankers. But then the costly lease came up against an immovable force. John McCain, the Republican senator from Arizona, launched his own investigation into why there wasn't more competition in the bidding process. That investigation led to revelations of corruption and insider dealings that scuttled the original deal, sent two people to prison and set in motion years of lobbying and competition.

One decade and three rounds of bidding later, the Air Force ended up with what it wanted in the first place: a 767 tanker, which it calls the KC-46. So were Sen. McCain's initial efforts to demand competition an exercise in futility? Perhaps not. This time around, the cost per aircraft was about half of what Boeing offered the Air Force in 2001, saving the government $16 billion—at least according to information provided by Boeing's rival, the European Aeronautic Defence and Space Company (EADS), which waged an intense public relations campaign to win the contract.

Here's how the whole convoluted affair unfolded:

September 2001: Just weeks after hijackers took control of four Boeing aircraft during the 9/11 attacks, reports emerge that the Air Force is thinking of leasing 100 tanker aircraft from Boeing. With the commercial airline market in tatters and the Air Force in need of new tankers, Air Force leaders and their Congressional backers see the lease as a way to help Boeing while also meeting an urgent military need. McCain, however, begins to raise questions about the actual cost of the lease to the government and the lack of competition.

March 2002: The Air Force eventually allows EADS to submit a bid based on its Airbus 330 but decides in the end to go with Boeing. Total cost, assuming the Air Force purchases the aircraft at the end of the lease: $30 billion.

September 2003: The Pentagon begins to investigate the tanker contract, prompted by McCain, who releases a series of embarrassing e-mails written by Boeing and government officials, including some that seem to indicate a conflict of interest. In one from 2003, a White House official asks then–secretary of the Air Force James Roche to help her brother get a job with a major defense contractor. He agrees to help and writes back, "Be well. Smile. Give me tankers now."

April 2004: Darleen Druyun, a former top Air Force weapons buyer, pleads guilty to violating conflict-of-interest laws, followed several months later by Michael Sears, once Boeing's chief financial officer. Both spend time in prison. Information turned over by Boeing reveals that Sears met with Druyun at a conference in Orlando, Fla., in October 2002 to discuss her plans to join Boeing. Sears later wrote about his job discussion with Druyun in an e-mail, describing it as a "non-meeting." Despite engaging in those talks with Boeing, Druyun continues to work on the tanker deal.

January 2006: The lease deal is scrapped.

January 2007: Back to square one. The Air Force starts anew with open bidding to supply tankers. Boeing offers its 767, while EADS teams with American defense company Northrop Grumman, promising an Airbus 330–based tanker that it would manufacture largely in the United States.

February 2008: This time, the Northrop Grumman–EADS team wins. A Pentagon acquisition official later says that the Airbus aircraft was substantially cheaper than Boeing's. Following the award, Boeing lodges an official protest.

June 2008: In response to Boeing's protest, the U.S. Government Accountability Office determines that "the Air Force had made a number of significant errors that could have affected the outcome of what was a close competition between Boeing and Northrop Grumman." The Air Force eventually terminates the Northrop–EADS award, embarking on yet another round of bidding.

February 2011: Almost 10 years after the tanker odyssey begins, Boeing wins the bid to supply 179 tanker aircraft to the U.S. Air Force at a cost of more than $30 billion, with the final amount depending on the options that the Pentagon exercises. Both the Boeing and Airbus tankers met the basic requirements, but the deciding factor, according to the Pentagon, was price. EADS says it won't protest the decision, marking a possible end to the saga. "[T]his competition favored no one except the taxpayer and the warfighter," Deputy Defense Secretary William Lynn declares.

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